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Which of the following is NOT necessary for price discrimination to occur?


A) The firm must be able to separate the market into identifiable groups.
B) The firm must be selling a durable good.
C) The firm must have a downward sloping demand curve.
D) The firm has to be able to prevent resale of the product or service.

Correct Answer

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For a monopolist,


A) marginal revenue is less than price.
B) marginal revenue equals price.
C) marginal revenue is greater than price.
D) marginal revenue equals average revenue.

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Which of the following is a TRUE statement about a monopoly?


A) A monopoly does not necessarily earn positive economic profits.
B) A monopoly must earn an above-normal profit to stay in business.
C) As long as there are barriers to entry,a monopoly can always find some price-output combination that generates positive economic profits.
D) As long as the demand curve slopes down,a monopoly can always find some price-output combination that generates positive economic profits.

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A monopolist finds the price-output combination that maximizes its profits by


A) equating total revenue and total cost.
B) equating marginal revenue and marginal cost.
C) finding the combination for which the difference between marginal revenue and marginal cost is the greatest.
D) equating price and marginal cost.

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Establishing different prices for similar products to reflect differences in marginal cost in providing those goods to different groups of buyers is


A) price discrimination.
B) cost-plus pricing.
C) price differentiation.
D) product differentiation.

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Which of the following is NOT a precondition for price discrimination?


A) The product cannot be resold to another customer.
B) The price elasticities of demand are different for each group of consumers.
C) The product is a durable good.
D) The seller must have some market power.

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A monopolist engages in price discrimination


A) by charging a higher price to consumers whose demand is more inelastic.
B) by charging a lower price when marginal cost is higher.
C) by charging a lower price to consumers whose demand is more inelastic.
D) by charging the same price to all consumers.

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If there are no barriers to entry into an industry,


A) short-run economic profits must be zero.
B) long-run economic profits must be zero.
C) both short-run and long-run economic profits must be zero.
D) short-run and long-run profits must still be positive.

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If marginal cost is constant,what happens to a market if it alters from perfect competition to monopoly without any change in the position of the market demand curve or any variation in costs?


A) Consumer surplus increases,and the previously existing deadweight loss decreases.
B) Consumer surplus increases,and the previously existing deadweight loss increases.
C) Consumer surplus is eliminated,and an equal-sized deadweight loss is created.
D) Consumer surplus decreases in size,and a deadweight loss is created.

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Under a monopoly,resources are misallocated such that


A) too few resources are used in other industries,and too many are used by the monopoly.
B) too few resources are used by the monopoly,and too many are used elsewhere.
C) resources are being used as efficiently as possible only by the monopoly.
D) consumers are being forced to pay a price below the MC of the monopolist.

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Which of the following is not true about a tariff?


A) It is a barrier to entry in a market.
B) It leads to a natural monopoly.
C) It is a tax.
D) It affects imported goods.

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Entry barriers are most significant in


A) pure competition.
B) monopolistic competition.
C) oligopoly.
D) pure monopoly.

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What is true of the price elasticity of demand faced by a monopoly firm?


A) Demand is inelastic.
B) Demand is more elastic at lower prices and more inelastic at higher prices.
C) Demand is perfectly elastic because the monopolist has no competition.
D) Demand becomes more elastic as the range of imperfect substitutes expands.

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PQ TC $1310$8$1215$30$1120$68$1025$128$930$208$835$308\begin{array} { l l r } \hline \mathbf { P } & \mathbf { Q } &\text { TC } \\\hline \$ 13 & 10 & \$ 8 \\\$ 12 & 15 & \$ 30 \\\$ 11 & 20 & \$ 68 \\\$ 10 & 25 & \$ 128 \\\$ 9 & 30 & \$ 208 \\\$ 8 & 35 & \$ 308 \\\hline\end{array} -Refer to the above table.Given the demand and cost schedules,what is the profit-maximizing price for this monopolist?


A) $13
B) $12
C) $11
D) $10

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Which of the following is true of a perfectly competitive firm and a monopoly in the long run?


A) P = MC
B) P = ATC
C) MR = MC
D) P = MR

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For a profit-maximizing monopolist,


A) P > MC.
B) P = MC.
C) P = MR.
D) P = ATC.

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A firm can be the only firm in an industry and still not be a monopoly if


A) the firm is not large.
B) the firm is not making economic profits.
C) the firm produces a good similar to a good in another industry.
D) the firm produces a good that is not considered a necessity.

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Compared to perfectly competitive firms,the demand curve for a monopolist will be


A) as elastic.
B) more elastic.
C) less elastic.
D) perfectly elastic.

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The price-output combination that maximizes profits for a monopolist occurs at the point where


A) total revenues and total costs are equal.
B) the difference between total revenues and total costs is the greatest.
C) total revenues are the greatest.
D) the elasticity of demand equals one.

Correct Answer

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Economies of scale can


A) result in an increasing cost industry.
B) cause input prices to drop.
C) prevent the entry of new firms into a market.
D) reduce the rate of return which the firm may earn.

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